The latest economic report from the Bureau of Economic Analysis came out on January 29th, 2015, and there is simply no spinning it.
Real gross domestic product… increased at an annual rate of 0.7 percent in the fourth quarter of 2015…
A 0.7% GDP growth for Quarter 4 (October-December) is not only poor, short of actual negative numbers, it is positively dismal. Worse, if we continue reading:
The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment, and federal government spending…
Notice, GDP growth was “primarily” driven by consumer spending (Christmas season shopping), implied home purchases or investments (but more likely rental property improvements), and federal spending. And the report later goes on to say that weakness in consumer spending and residential purchases caused the weakening GDP growth. And now the really bad news.
Federal spending isn’t actual economic activity, as it, at best, represents a zero sum reallocation of economic growth that was already counted in another sector of the economy. Take out 0.5% for federal spending (a low end estimate), and real GDP growth in Quarter 4 was practically 0%. Assuming a 1.0% contribution from federal spending, real GDP growth was negative in Quarter 4, indicating the start of a possible recession.
On the employment front, the latest jobs report came out on Friday, February 5th, though the Iowa Caucus buried the news.
Total nonfarm payroll employment rose by 151,000 in January…
This number again is less than half the 312,500 jobs a month LibertyIsFTW asserts is necessary to reach full employment by the end of Obama’s second term. And, worse still, the “big finish” for December of 292,000 jobs was revised downward to 262,000, taking the air out of the December jobs numbers the left hyped a month ago. At 151,000 jobs created in January, the economy is barely accommodating new workers entering the job market.
The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged in January, at 2.1 million, and has shown little movement since June. These individuals accounted for 26.9 percent of the unemployed… In January, 2.1 million persons were marginally attached to the labor force, little different from a year earlier… Among the marginally attached, there were 623,000 discouraged workers in January, essentially unchanged from a year earlier.
Since the economy is not hitting 312,500 jobs per month, this is totally expected. To make any dent in these numbers now, jobs created would have to be closer to 500,000 a month, and that’s unlikely with an annualized GDP growth rate of 1.78% for 2015.
With the Federal Reserve core loans rate still below 1.0%, there is no room to stimulate an economy that has remained flaccid for most of the last 7 years under Obama. LibertyIsFTW has predicted a recession in 2016 as early an Quarter 3, however the Quarter 4 2015 numbers indicate that we may already be in that recession.
That’s the Economics Speed Round for February. Catch everyone next month.
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